Flash Magazine is reporting that Adobe is indeed developing Flash Player for the iPhone. It appears they have a team working on development, if the report is to be believed. I would note, however, the language used here: Flash Player, not Flash Plugin.
The Flash many have come to know and love (or hate) is embedded in websites and loaded with a browser plugin. As far as I know, Safari on the iPhone has no plugin architecture. I see three outcomes here:
First, Adobe is developing Flash Player as a separate browser, possibly based on Webkit. If you know you are going to a site that uses Flash, you launch the Adobe built browser. Obviously, this isn’t the ideal situation as users would now have two different browsers to use depending on the site technologies.
Another option is to have Flash behave similar to QuickTime on the iPhone. When a user browses to a site with Flash, an icon is displayed which the user can click to launch the content in the Flash player. This might work, but there are two caveats: Only for sites built entirely in Flash or that use Flash for content purposes (think video and games) would benefit. Sites that just incorporate Flash into certain portions, like navigation or animated elements would either break or lose their intended design. Second, Adobe would have to be working closely with Apple for this implementation, which clearly isn’t happening. If they were partnering with Apple in this way, they would be either definitive in ther colaboration, or completely tight-lipped. Not these in-between quotes which continually pop up.
The last outcome, and perhaps most probable: this just won’t happen. I think Flash on the iPhone is the new Duke Nukem Forever.